How did Texas tax a service that made written and photographic records of customers' property for future fire or theft claims?

Plain-English summary

The Texas Comptroller said the charge for photographs documenting a customer's personal property was taxable. A charge for the accompanying written record was not taxable if separately stated in the contract or invoice.

The Comptroller rejected the idea that the business provided only a nontaxable information service with tangible property incidental to it. The photographs were tangible personal property and were critical to the customer's intended future use after a fire, theft, or similar event.

What this means for you

Separately stating the written-record charge mattered, but it did not make the photographic component nontaxable. The letter looked at what the customer was really buying and found that the tangible photographs were a central part of the transaction.

Common questions

Were the photographs taxable? Yes.

Was the written record taxable? Not if its charge was separately stated in the contract or invoice.

Was the whole transaction a nontaxable information service? No.

Citations and references

• The letter cited no numbered statute or Comptroller rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8703L0806G13

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller March 4, 1987

Dear ***:

Thank you for your letter of February 9, 1987 concerning the tax
responsibilities of your business.

You state that you make a written and photographed record of a customer's
personal property. The records will be maintained in a safety deposit
box
for future use in the event of a fire, theft, etc.

The charge for photographs is subject to sales tax; the charge for the
written record will not be taxable, if separately stated to the customer
in
the contract or invoice. You are not the provider of a nontaxable
service in
this situation. The essence of this transaction is not the providing of
information only, to the customer, with the tangible property merely
incidental to the service. Instead, the customer has purchased tangible
personal property (Photographs) in a form which is critical to the
intended
future use.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,
Julie Pesl
Tax Policy Section
Tax Administration Division